Medicare Advantage vs. Medicare Supplement: What’s the Difference?

When it comes to Medicare, it can be difficult to know what is and is not covered. The basic plan doesn’t cover everything, which means you are responsible for all copayments and deductibles. These can easily add up to be a heavy expense. Since there is this coverage gap with original Medicare, there are two additional private insurance options that help keep you covered: Medicare Advantage and Medicare Supplement plans.

Medicare Supplement Programs (Medigap)

When you sign up for a supplement plan, you will still be enrolled in original Medicare as well. Medicare will pay for the majority of your healthcare bills while the Medigap purchased through private insurance companies will cover any copayments or deductibles that are left over. As of 2015, there are 10 different supplement programs that you are able to enroll in labeled by letter – A through N. However, in order to be eligible for these, you must first be enrolled in Medicare part A and B. Additionally, you cannot have a supplement program in addition to Medicare Advantage.

On top of your Medicare plan payments, you will also have to make payments to the private insurance company for your Medigap premium. Medicare supplement programs will only cover one person. You can purchase Medigap coverage from any insurance company that is licensed in your state, though the price will vary from place to place.

As long as you continue to pay your monthly premium, no company can drop your supplement policy, regardless of any health problems you may have. These Medigap policies will not cover any prescription medications, so it’s still essential that you join Medicare Part D if you need extra coverage for prescription medications. Medigap policies will help to close the gap, but there are some things they still won’t cover, such as long-term care, vision, dental, hearing aids, glasses, or private-duty nursing.

Medicare Advantage Benefits

Private insurance companies have more flexibility when designing Medicare Advantage plans, so there will be more variability between different plans. Unfortunately, this can make signing up for a plan a little harder since it’s easy to overlook some features. Many Medicare Advantage plans will include Medicare Part D for prescription medicines, which means you won’t need to additionally purchase it on the side. There are also some Medicare Advantage plans that offer vision, hearing, and dental coverage as well.

There are different types of Medicare Advantage plans, including Health Maintenance Organization Plans (HMOs), Preferred Provider Organization Plans (PPOs), Private Fee-for-Service Plans (PFFS), and Special Needs Plans (SNPs). Each plan offers their own benefits, so it’s important to read each outline carefully.

HMOs require you to use certain doctors. Generally, you will have to choose a healthcare physician from their “network” of doctors who have been pre-approved by them. PPOs will also have doctors in a network that you have to choose from. PFFS plans, on the other hand, will allow you to go to any Medicare-approved doctor. Not all providers will accept the plan, but those who do will be covered by PFFS. Finally, SNP plans limit their membership to those with specific diseases or characteristics. Individuals who live in certain institutions (like nursing homes) or those who have specific chronic or disabling conditions will qualify for this type of insurance coverage.